Sutter Health Financial Performance

2018 Financial Performance

Integrated healthcare delivery system Sutter Health has announced its financial
performance for 2018. Sutter Health’s combined 2018 income was $201 million,
which reflects the day-to-day operations of its hospitals, physician based care centers
and a variety of other healthcare services, compared to $326 million in 2017. The
system’s total 2018 operating revenues of $13 billion increased slightly from
2017’s operating revenues. Sutter Health posted $(267) million in investment
income and changes in net unrealized gains and losses from investments classified
as trading in 2018, compared to $651 million the prior year. Income attributable to
Sutter Health for 2018 was $(198) million, compared to $893 million in 2017.

Dollars in millions

2018

2017

Operating Revenue

$12,697

$12,444

Operating Expenses

12,496

12,118

Income from Operations

201

326

Investment Income

187

336

Change in net unrealized gains/losses from investments classified as trading

(454)

315

Loss on extinguishment of debt

(54)

(19)

(Loss) Income

(120)

958

Less income attributable to non-controlling interests

(78)

(65)

(Loss) Income attributable to Sutter Health

(198)

893

Capital Investment

$924

$924

Community-Based Investments to Improve Access to Healthcare

The shift in overall performance between 2017 and 2018 was due to the temporary
swing in the investment market at the end of the fourth quarter, as well as the fact
that Sutter Health recognized multiple years of revenue from the Hospital
Fee Program1 in 2017. As an integrated network of care, Sutter Health
is positioned to withstand changes such as these. This ability gives Sutter the opportunity
to further expand community access to high-quality healthcare. Additionally, as a
not-for-profit, Sutter continually reinvests in its communities. In 2018, Sutter Health
invested $924 million in new facilities and lifesaving technology throughout Northern
California—extending its total investment to nearly $10 billion during the last
10 years.

The construction of California Pacific Medical Center, which meets 2030 seismic
regulations, is now complete in San Francisco. The second of two new and innovative
hospitals, the CPMC Van Ness Campus located in the city center, opened on March 2.
The CPMC Mission Bernal Campus, located at Valencia and Cesar Chavez, opened Aug.
25, 2018. Sutter Health also facilitated expanded access to clinics through construction
projects in multiple communities, including Alameda, Contra Costa, Lake, Placer, Sacramento,
San Mateo, Santa Clara and Sonoma counties.

Sutter Health continues to innovate safe, high-quality care delivery outside of
hospital and clinic walls to meet community needs for flexibility and efficiency—all
with an eye toward also helping reduce healthcare costs. Sutter’s support runs
across the healthcare spectrum—from where people access their care to how they
manage their care. Video visits and walk-in care centers helped create more options
for patients to access primary care in 2018. More than 1 million appointments were
scheduled online by patients last year, offering greater ease and convenience. Sutter
Health also invested $54 million in research and development in 2018, supporting efforts
addressing a range of health concerns including stroke, breast cancer, Alzheimer’s
disease and dementia, recovery after liver and kidney transplant, and diabetes.

“Patients and families count on us to deliver high-quality care, and we are
committed to serving them and all those who call Northern California home,”
said Sutter Health President and CEO Sarah Krevans. “Thanks to our integrated
network, we continue to make care more accessible and more equitable. We focused efforts
on better connecting patients to the right care service, at the right time and in
the right place. We also maintained our commitment to care for the underserved. We’re
proud to play a strong role in making our overall communities healthier.”

Care for the Underserved

Sutter Health’s total investment in community benefit in 2018 was $734 million,
which is an increase from $612 million in 2017. This amount includes traditional charity
care and unreimbursed costs of providing care to Medi-Cal patients, as well as investments
in health education and public benefit programs such as community clinics and prenatal
care for those with low income. Overall, since the implementation of the Affordable
Care Act, greater numbers of previously uninsured people now have healthcare coverage
through the Medi-Cal program.

The payments for patients who are covered by Medi-Cal do not cover the full costs
of providing care. In 2018, Sutter Health invested $435 million more than the state
paid to care for Medi-Cal patients. Medi-Cal accounted for nearly 19 percent of Sutter
Health’s gross patient service revenues in 2018.

See more about how Sutter Health reinvests into the community by visiting sutterpartners.org.

1The Hospital Fee Program imposes a “quality
assurance fee” on certain general acute care hospitals in California. Each of
these hospital’s Hospital Fee Program’s proceeds are used to earn federal
matching funds for Medi-Cal, and to increase Medi-Cal payments, helping offset the
costs for expanding services to the most vulnerable population. Sutter Health’s
shift in overall performance between Fiscal Years Ended December 31, 2017 and 2018
is, in part, due to Sutter Health’s recognition of multiple years of revenue
from the Hospital Fee Program in Fiscal Year Ended December 31, 2017. For Fiscal Year
Ended December 31, 2017, Sutter Health recognized $432 million from the Hospital Fee
Program compared to $272 million for Fiscal Year Ended December 31, 2018.